Policy Change Transaction

A policy change transaction is a modification made to a policy while it is in-force. What sort of changes
might happen to a policy mid-term? The main purpose of a policy change is to modify one or more
elements of a policy.

For example, you can use a policy change to change a coverage, exposure, or location. You can add a
driver or change the terms of payment. Policy changes occur fairly regularly.

Common personal auto examples include:

• Adding another person to your policy as a driver
• Increasing your deductible so that you have a less expensive premium
• Adding or removing a vehicle and changing some of the vehicle coverages
Common workers’ compensation examples include:
• Adding or changing a location
• Updating the number of employees
• Updating the basis
Common businessowners examples include:
• Changing your business location
• Changing the type or amount of coverage
There are other types of less commonly used policy changes, such as out-of-sequence policy changes
and preemption.

Policy Change General Steps

The following diagram shows the basic steps to create a policy change. These steps are for the default
configuration of PolicyCenter. Your business requirements and even lines of business can alter the
process. The steps may differ slightly between personal and commercial lines and in how you access
policy change screens.
Creating a Policy Change
1. Navigate to a policy and select Change Policy from the Actions menu.
2. Specify an effective date and optionally enter a description for the policy change.
3. Make changes to the policy contract by using the policy change wizard links on the left of the screen.
4. Review changes made to the policy by selecting Policy Review. This review identifies any additions,
removals, or changes to the policy.
5. Since a change typically involves modifications to the exposures or coverages, you must select Quote
to requote the policy.
The tabs on the Quote screen provide different views of the financial impact of the policy change.
View the different cards on the Quote screen to see the financial impact of the policy change.
• Viewing the Policy Premium card itemizes the entire policy as it stands after the change. This
information does not distinguish between exposures and coverages previously on the policy and
those just being added to (or removed from) the policy.
• The Cost Change Detail card shows the transaction cost (offset and onset) resulting from the
policy change.
The basic purpose of these cards is to answer various questions an insured might ask when exploring
the financial impact of a policy change. The insured might ask, “How much will this cost me right
now?” and “What is the total cost for this policy going to be?”
6. After the policy change has been successfully quoted, you can:
• Edit and requote. To edit policy changes, you must have the viewpolchange and editpolchange
system permissions.
• Create a new version.
• Save the draft.
• Select close options.
7. Click Issue Policy to bind and issue the policy.
This action is similar to binding a submission. After binding, the change becomes a legal part of the
contract as of the change’s effective date.

Editing the Policy Change Effective Date

You can edit the policy change effective date in an unbound policy.
1. Find a policy change that has not been bound and issued.
2. Select Actions → Edit → Effective Date.
The Policy Change Summary screen appears.
3. Modify the Effective Date and, optionally, the Description.
4. Click Next to advance to other screens in the policy change wizard. 5. Click Quote or Save Draft.
6. Click Issue Policy if you wish to bind and issue the policy change. After you issue the policy, you are no
longer able to edit the effective date of the policy change.

Using the Policy Review Screen to Verify Changes

In PolicyCenter, you can see your policy changes prior to binding, by viewing the Policy Review screen.
Use this screen to review your changes and to verify that there are no conflicts. The contents of this
screen are dynamic, and it displays:
• Any changes you have made.
• Any conflicts that you need to resolve before binding (if the policy change is out-of-sequence)
• Any conflicts related to preemption.
Note: Although the Policy Review screen displays changes to the policy, also review the Quote screen to
see how your changes may result in a different premium. In the Quote screen:
• The Cost Change Detail tab displays the transaction cost (offsets and onsets) resulting from the policy
change.
• The Policy Premium tab displays the breakdown of the premium for the entire policy period.

Handling Out-of-sequence Policy Transactions in a Policy Change

Out-of-sequence policy transactions are policy transactions with an effective date is before the effective
date of a previous policy transaction on the same policy. Carriers sometimes call these situations out-of-
sequence endorsements.

PolicyCenter uses the term out-of-sequence.

A policy can have changes with effective dates that are not sequential. Sometimes this is not an issue.
However, there are other times that multiple policy transactions can conflict with each other.
PolicyCenter handles these conflicting policy transactions by first recognizing them and second, by
allowing you to reconcile any conflicts that result. Policy transactions conflict when a policy change has a
transaction date later than another policy transaction, but an effective date earlier than that other
policy transaction.

Using Preemption in a Policy Change

A preemption can occur if two policy transactions are open on a policy at the same time. The first policy
transaction that binds preempts the second one. PolicyCenter handles preemptions by merging the
changes made in the preempting policy transaction with the changes made in the preempted policy
transaction. The user interface provides you with a way to merge these changes into the preempted
policy transaction. Preemptions are not unique to policy changes; they also occur in audits,
cancellations, reinstatements, and renewals.